Court of Appeal for Ontario
Citation: Motion Industries (Canada) Inc. v. McCarthy, 2015 ONCA 224
Date: 2015-04-07
Docket: C58619
Before: Sharpe, Pepall and van Rensburg JJ.A.
Between
Motion Industries (Canada) Inc. Appellant/Defendant
and
Kerry McCarthy Respondent/Plaintiff
Counsel: Daniel McDonald and Rahool Agarwal, for the appellant Eric O. Gionet, for the respondent
Heard and released orally: March 27, 2015
On appeal from the order of Justice Martin S. James of the Superior Court of Justice, dated March 12, 2014.
ENDORSEMENT
[1] The appellant employer appeals the decision of the trial judge finding that it constructively dismissed the respondent and awarding substantial damages for wrongful dismissal.
[2] The appellant raises four issues:
The trial judge inappropriately used judicial notice in relation to certain economic facts when finding that the respondent was constructively dismissed;
The trial judge erred by failing to find the respondent was obliged to accept the recall proposal as part of his duty to mitigate;
The notice period of 16 months was unreasonable; and
The trial judge erred in his determination of the respondent’s date of termination on account of the Employment Standards Act, 2000, S.O. 2000, c. 41, s. 56.
[3] For the following reasons the appeal is dismissed:
1. Judicial Notice
[4] The appellant’s submission on this issue focuses on para. 59 of the trial judge’s reasons which states as follows,
In my view the defendant was obliged to recall the plaintiff to a position similar to the work he had been performing before the lay-off went into effect. I accept the plaintiff's evidence that he was prepared to return to the same position even though there were no orders on the books at that time. It is reasonable that he assessed the prospects for new orders as fairly good. The commission structure was sufficiently generous that it was worth the risk. The mining industry is notoriously cyclical and a bet that the demand for drill rigs would resume was not foolishly speculative. Mining companies and the businesses that service them in northern Ontario have experienced significant swings in demand and prices over many decades. Cyclicality is a way of life in the mining sector.
[5] We do not accept the argument that the trial judge’s findings in this passage, in relation to the implications of the cyclical nature of the mining industry, rest upon an inappropriate use of judicial notice.
[6] First, the trial judge’s comments as to the cyclical nature of the mining industry were made in the context of his assessment of the respondent plaintiff’s response to the position he was offered by the appellant. The respondent had worked for several years on a commission basis, and he had seen wide fluctuations in his income which was entirely dependent on the BOAR04 account. The respondent had assumed major responsibility for all aspects of that account. He had reached the point where the management of that account was the essence of his job. His position with the appellant was defined by that responsibility.
[7] In our view, the reference made by the trial judge to the cyclical nature of the mining industry was essentially a recognition that the respondent’s position entailed a risk, and that the respondent was prepared to accept that risk. The trial judge found as a fact, that the appellant had made a clear determination to remove the BOAR04 account from the respondent. There was evidence in the record to support the trial judge’s finding that the respondent was prepared to return to that position, despite the uncertainty in the market at the time of his recall. The reference to the cyclical nature of the mining industry was merely background to the trial judge’s finding that the respondent was in effect prepared to assume the risk his former position had entailed, and to forego the certainty of the steady but significantly lower income the appellant’s offer would have afforded him.
[8] Second, in any event, there was evidence in this record to support a finding that the mining industry was indeed cyclical. The volume in the BOAR04 account had risen and fallen dramatically. That rise had yielded huge commissions for the respondent and the fall had resulted in him accepting a temporary lay-off. There was clear evidence that the BOAR04 account was showing signs of life at the time the appellant decided to remove it from the responsibility of the respondent.
[9] We add here that these findings are sufficient to satisfy the test for constructive dismissal as defined by the Supreme Court of Canada in both Farber v. Royal Trust Co., [1997] 1 S.C.R. and Potter v. New Brunswick (Legal Aid Services Commission), 2015 SCC 10.
[10] Accordingly, we reject this ground of appeal.
2. Mitigation
[11] We see no basis upon which to interfere with the trial judge’s finding in relation to the obligation to mitigate. This was essentially a factual question upon which the trial judge’s findings are entitled to deference. The trial judge flatly rejected the appellant’s evidence that the removal of the BOAR04 account from the respondent’s responsibility had no significance given the current status of that account. As the trial judge put it at para. 65, “The future prospects and plans for the drill rig production account and the rich stream of commissions generated by it would have been the ‘elephant in the room’”. There was evidence to support the finding that the position offered to the respondent was substantially different from the one he had previously enjoyed, and that that change in responsibility amounted to a significant diminution in his status and station. Accordingly, he was not obliged to accept that position in mitigation.
3. Notice period
[12] We are not persuaded that there was any error in the trial judge’s assessment of 16 months as reasonable notice. The trial judge referred to the appropriate legal test and the respondent’s age, years of service, responsibilities, education, and the difficulty he would face in finding alternative equivalent employment.
4. Termination Date
[13] The appellant makes a number of arguments in reliance on the provisions of the Employment Standards Act. We note that only one of these arguments appears to have been raised at first instance, namely, whether the respondent’s termination date relates back to January 29, 2009, in which case damages would be reduced to $294,092.33, assuming the 16 month notice period was applied by the trial judge, or approximately $26,000, if the notice period was reduced to 12 months. The trial judge concluded that there was no relation back to the commencement of the lay-off period.
[14] The appellant relies on the provisions of ss. 56(1), (2), (4) and (5) of the Employment Standards Act. Section 56(1) states that it applies for the purposes of s. 54. Assuming without deciding that s. 56 is engaged in the context of this common law action for wrongful dismissal, we reject the appellant’s arguments.
[15] Section 56(1)(c) provides that an employer terminates the employment of an employee for the purposes of s. 54 (the requirements to give written notice and statutory termination pay) if the employer lays the employee off for a period longer than the period of a temporary lay-off. The appellant contends that under s. 56(2), for a non-unionized employee like the respondent, the temporary lay-off would expire at 35 weeks unless the employee had been recalled. Section 56(5) provides that if an employee is not recalled before the end of the temporary lay-off, his employment “shall be deemed to be terminated on the first day of the lay-off”.
[16] The appellant’s argument is based on on s. 56(4):
Temporary lay-off not termination
(4) An employer who lays an employee off without specifying a recall date shall not be considered to terminate the employment of the employee, unless the period of the lay-off exceeds that of a temporary lay-off.
[17] The appellant submits that the effect of s. 56(4) is that an employer can only terminate an employee on temporary layoff through the expiry of the lay-off period. In other words, by operation of law, this provision ousts the application of the common law doctrine of constructive dismissal during the temporary layoff period.
[18] We reject that argument for the following reasons.
[19] First, we note that the argument was not advanced at trial.
[20] Second, we are unable to accept the proposition that the language of s. 56(4) is capable of excluding the possibility of constructive dismissal. The appellant concedes that this provision was added to the legislation to correct the mischief under the prior wording of the section that had been interpreted to mean that laying off an employee without specifying a recall date amounted to termination. We see no reason to expand the interpretation of this provision beyond that meaning. The Act is remedial in nature and s. 56(4) was enacted to remedy a specific issue. To accept the interpretation advanced by the appellant would go well beyond that purpose and would defeat the remedial objective of the Act as a whole.
[21] In any event, we agree with the trial judge that the respondent was recalled before the end of the temporary layoff period and that the position he was then given amounted to constructive dismissal. It is clear on the evidence that the mutual intention of the parties was to ensure that the respondent was recalled before the end of the temporary lay-off period and that the appellant did not intend to terminate his employment.
[22] Finally, the appellant argues, again for the first time on appeal, that the effective date of the end of the 35 week lay-off period was September 27, 2009, not October 9, 2009. If accepted, this submission would mean that the respondent was terminated by operation of law under s. 56 (1)(c) before the alleged constructive dismissal and by virtue of s. 56(5), the termination date is the first day of the lay-off.
[23] We reject this submission.
[24] The appellant cannot assert for the first time on appeal that the return to work date was September 27, when the date it communicated to the respondent, the date that was accepted by both parties, and the only date that was relied on by both parties at trial and by the trial judge, was October 5, 2009. It would be fundamentally unfair to permit the appellant to rely on its own error (if indeed there was an error) in calculating the ESA time frame at this stage, to deprive the respondent of the benefits to which he would otherwise be entitled.
Disposition
[25] Accordingly, the appeal is dismissed.
[26] Costs to the respondent fixed at $15,000 inclusive of disbursements and taxes.
“Robert J. Sharpe J.A.”
“S.E. Pepall J.A.”
“K. van Rensburg J.A.”